Marshall Dixon and others v Wellington Close Management Ltd [2012] UKUT 95 (LC) is, so far as I can tell, the first Lands Tribunal/Upper Tribunal case on s.37, Landlord and Tenant Act 1987. As you’ll know, the 1987 Act gives the LVT power to vary residential leases. It can do this if the lease is defective in some way (s.35) or if the requisite majority of leaseholders agree and n0-more than the specified minority object (s.37 – a sort of qualified majority voting basis). The key provision is s.37(5), which provides that, in a building with more than eight leases, an application “shall only be made” if it is not opposed be more than 10% of the leaseholders and supported by at least 75%.
The case involved 132 leases in a development consisting of three blocks. Variations were proposed so as to extend, inter alia, the repairing covenants of the landlord. At the time of the LVT application, it seems that 10 leaseholders objected to the variation. By the time of the LVT hearing, it was up to 13. That, it was said by the objectors, was more than 10% opposed and, therefore, the application should fail. The LVT rejected this, saying that 13 was “not more” than 10% and that 14 objectors would be needed.
The Upper Tribunal held that the first issue to decide was at what point in time the 10% objection had to be established. The UT held that the key date was when the LVT application was made and that anything after that – whether consent or objection – should be disregarded. Whether someone was objecting was to be assessed objectively. No more than 10% had actively expressed opposition when the application was issued and, hence, the appeal was dismissed.
The UT went on to recomend that the LVT should amend its application forms for variation applications to require applicants to specify how many leases were involved, how many actively consented and how many actively opposed, togehter with an indication of the need to produce evidence to prove that.
Am I reading that incorrectly or did they really try to argue that 13 out of 132 was more than 10%.
The argument ran as follows…There are 13 objectors. If you add in the landlord there are 133 parties. 10% of 133 is 13.3. You have to round the figure up or down to get to a single party and so you round it down to 13 and 13 is the number of objectors so QED. To be fair to the objectors I suspect that this was not the argument that they wanted to be at the foundation of their appeal. There was one person who had been listed by the landlord as an objector when the application was made who did not respond to the LVT’s requested clarification about which lessees objected and if that original “objector” was added to the 13 who objected in the response to the LVT’s requested clarification then the magic number of 14 was obtained.
The objectors seemed to be most angered by the fact that the landlord was said to have offered that lessees who agreed to the variations would be given 999 year leases for no premium and objectors would not get the same benefit.
Another point of interest is that UT made clear that it was entitled to decide that people the landlord had treated in their original application as “objectors” were not, in fact, objectors if that was the correct objective view.
Thanks JAC – I was in the LVT all day, so didn’t have time to respond. I agree with all you say